The following is NOT an example of a potential monitoring solution to moral hazard
a. blocking social network sites on company computers
b. closed circuit TVs throughout a warehouse
c. requiring a kitchen remodeling contractor to be 'bonded'
d. listening in on call center conversations
c
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Which of the following is true of government debt?
a. The interest payments on federal bonds held by Americans will be paid to investors in other countries. b. The share of the federal debt held by foreigners has declined from 35 percent of GDP in 1990 to less than 10 percent of GDP in 2012. c. Between 2000 and 2012, federal debt owed to foreigners has risen from approximately 10 percent to 35 percent of GDP. d. Less than 5 percent of the federal debt is owed to foreigners.
Suppose you purchase a $1,000 bond that bears an interest rate of 10 percent. What will happen if the interest rate goes to 20 percent?
A. The market price of the bond will increase to $2,000. B. The market price of the bond will drop to $500. C. The return on the bond will double. D. The return on the bond will halve.